BL–11. Telegram from the Ambassador in Bolivia (Bonsal) to the Department of State1
119. JOINT EMBASSY-USOM
Andrade and IMF mission departed today. IMF mission has made some progress in convincing GOB of necessity for exchange rate action. According to IMF mission Siles however still hopes keep depreciation to figure below that recommended by IMF (20 to 25 percent) and wished handle rate change as part of package deal which would include end wage freeze, freedom hiring and firing, possible new currency and specific wage adjustments and perhaps some price controls. Presentation such package which would presumably include announcement additional outside aid (U.S. program plus IMF) would in President’s thinking take place toward end September. This generally confirmed by Andrade.
Andrade has been charged by President with attempting secure loan of approximately $10 million secured by future oil royalties and designed assist balance of payments and facilitate development [Typeset Page 164] projects. Andrade will make high level attempt secure such loan but appears unoptimistic.
Meanwhile dollar drain continues and it is matter of days until dollar resources will be exhausted and presumably Central Bank will have to suspend sales. In conversations with Andrade and Tamayo I have made clear our support of IMF position.
I expect to see President shortly. Please advise to what extent I can discuss magnitude of proposed FY 1959 program with him. Extent to which I can give details and discuss perhaps on highly confidential basis this program as well as possible tin barter deal and our realization YPFB possibilities may have [Facsimile Page 2] determining effect on President’s attitude.
President is confronted with extremely serious domestic political, social and economic problems. In order meet these firmly he needs concrete assurances of increased support from U.S. I would hope I could be authorized soonest at least discuss with him program on which there appeared general agreement last week in Washington.
- Source: Department of State, Central Files, 398.13/9–353. Confidential; Priority.↩